Contango Ore confirms Kinross cost guidance for Manh Choh

Alaska gold explorer Contango Ore (NYSE-AM: CTGO) has completed a technical report summary on the Manh Choh project, confirming the results of the feasibility study and subsequent updates prepared by KG Mining, its joint venture partner and subsidiary of Kinross Gold (TSX: K; NYSE: KGC).

Contango has a 30% interest in the JV, with Kinross holding 70%. Kinross expects its share of Manh Cho production over a short 4.5 year mine life to total around 640,000  oz. gold.

In 2022, Kinross’s board decided to go ahead with the project, after releasing a feasibility study for Manh Choh ahead of schedule. The study outlined a plan to batch process the high-grade ore of roughly 8 grams gold per tonne through Kinross’s Fort Knox mill, about 400 km distant.

The feasibility pegged preproduction capital costs at US$255 million.

Commenting on the technical report summary, CEO Rick Van Nieuwenhuyse said: “The results of the report are consistent with prior guidance including the estimated all-in sustaining cost (AISC) of US$1,116 per gold equivalent ounce and the initial capital costs of US$64.6 million for Contango’s 30% portion.”

By using existing facilities at Fort Knox, the Manh Choh project can proceed without having to permit, capitalize, and construct a mill or tailings facilities, the feasibility study showed. The project has received the federal permits needed for road construction, and early work construction is already underway.

The project is on 675,000 acres of exploration and development land the JV partners are leasing from the Tetlin Tribe through future production royalties. The lease is also subject to a 3% net smelter royalty in favour of Royal Gold, the JV’s former partner prior to Kinross.

The Peak gold deposit, located in the northern part of the Tetlin lease, is a well-defined skarn-type orebody containing 1.3 million oz. of measured and indicated resources averaging 4 grams gold per tonne.

Probable reserves attributable to Kinross are 698,000 oz. gold and 1.2 million oz. silver (2.8 million tonnes grading 7.88 grams gold per tonne).

Earlier this year, Contango arranged a US$70 million senior secured loan facility with ING Capital and Macquarie to fund its portion of the pre-production construction and operating expenditures for the JV.

Production is expected to begin at Manh Choh in the second half of 2024, with a mine plan that consists of two small open pits that will be mined concurrently.